Sales and Distribution ManagementGroup 7 LBSIM, New Delhi

Flow of PresentationCompany OverviewProduct SpecificationsBusiness ModelMarket Classification, SegmentationSales Organization StructureSales Force MotivationForecasting, Distribution ModelCoke vs. PepsiLogistics, Product FlowPerformance ManagementPromotional SchemesMargins & FinancialsRecommendations

Company Overview

Coke re-entered India in 1993

Coke India comprises of: Coca-Cola India Hindustan Coca-Cola Beverages Franchisee bottling operations

Coke globally serves 500 brands in 200 countries @ 1.7 billion servings per day

Operates a franchised distribution system 1889

Market Cap: $167.25 Billion (Global)

Revenues: $46.542 Billion (Global)

Employees = 25K direct & 150K indirect (India)

Product Specifications

Contd.

Promotional Schemes Soft drinks:

600ml 1case + 2x500ml soda free 600ml 2case + 5x500ml soda free 2 litre 1case + 2x500ml soda free 1.25litre 1case + 1.25litre Limca free (1.5litre out of

stock)

Juice: 1.25litre 1case Mazaa + 1.25litre Mazaa free

Water: 5box (15x5) + 1box free

Energy drink: 1box (24pcs) + 4pcs free

Business Model

Manufactures & distributes Concentrates Syrups

Bottlers make the final beverage through COBO FOBO

Each bottler has an exclusive territory

Actual formulations are tightly held trade secrets

Business Model

Coca-Cola India

Regional BottlersCOBO/FOBO

Customers

Manufactures Concentrate, Beverage

base and Syrup

Manufactures finished Bottles/Cans/Fountain

Syrup

Consumers

Market Classification

GeographicalInternationally Coke segments its product

Country & region wise Variations as per tastes & income

CompetitionPresence of players such as:

Pepsi RC Cola

Segmentation Model

Grocery

Restaurant

Convenience

Bronze

Silver

Gold

Diam

ond

<200 200-499 500-799 >800

Outlet Type

Outlet Volume

Low

MediumHigh Consumer

Choice

Channel Clustering Based on Consumption Occasion

Mark

et

Clu

steri

ng

Base

d o

n Inco

me

Level of

Loca

lity

Outlet Clustering

Organizational Structure

Chair Person

G.M.

Marketing Manager Accounting Dept. Shipping Deptt.

Factory Manager

Marketing Manager Production Manager

Quality Control

Mechanical Engineer

Shipping Manager

ShippingShipping Officer

Personnel Manager

Sales Manager (Base)Sales Manager O/S

Sales OfficerSales Officer

Sales SupervisorSales Supervisor

Sales ManSales Man

Distribution Officer

Sales Organization Structure

Recruitment & Selection

Coca-Cola recruitment process is well established, they give ads in newspaper, company’s website, institutions,etc.

Coca-Cola recruits MT’s from premier B schools.

They mostly offer PPO’s to the Summer Interns.

SELECTION PROCESS INVOLVES: Group Exercise Interview Presentations Psychometric tests Situational Exercises

Training

Coca-Cola India partners with Indian School of Business (ISB) to launch the Coca-Cola – ISB Retail Academy

The ‘Parivartan’ program –Training small town retailers. Coke’s new strategy involves training retailers (around 6,000 of them) in a program launched by the Coca-Cola University

Performance Ratings

Exceptional performance –EP

Contributions significantly exceed the stated objectives in terms of quality, quantity and timeliness

Successful performance – SP

Contributions meet and sometimes exceed the objectives, which are based on challenging goals

Developing performance – DP

Contributions meet some / most but not all of the objectives and performance improvement is necessary

No Performance – NP

Contributions frequently do not meet the stated objectives

Sales Force Motivation

Incentives based on quarterly performance

No. of units and/or total revenue, work as a base for incentives

Every executive needs to add new outlets every year to get UNIT incentives

Target achievers are recognized by giving: TV, Fridge, etc.

Certificates / trophies

Lunch / outing with senior management, etc.

Foreign trips for managerial level & above

Rewards at Coke

Forecasting

Combination of top down and bottom up approach

Forecasts based on factors such as:

Historical data

Economic parameters

Seasonal variation

Festivals, ceremonies, etc.

Weekly reviews to adjust monthly forecasts

Forecasts are region-wise, they are further broken down into cities, towns and villages by sales managers

Distribution

Distribution Routes

Key Accounts Examples: Clubs, fine dine restaurants, hotels, Corporate houses etc.

Future Consumption Examples: Departmental stores, Super markets etc.

Immediate Consumption Examples: Small sized bars and restaurants, educational institutions

etc.

General

Distribution

Area wise distribution & promotion schemes

Focus on high traffic locations Railway stations

Bus stand

Coke India distributes using 2 routes Direct

Indirect

Cont.3 COBO Regions – 27 COBO units

1 FOBO Region – 12 FOBO units

COBO

Company owned bottling operations

FOBO

Franchisee owned bottling operations

}

Distribution Structure

Direct Indirect

Manufacturing Plant

Company Owned Depot

Primary

Retailers(Diamond / Gold / Bronze)

Customers

Secondary

Tertiary

Home Delivery Agent

COBO

FIFO3 Day

Inventory

Direct

On Order

&

Ready Stock

Distribution Structure

Direct Indirect

Manufacturing Plant

Distributors

Secondary

Retailers(Diamond / Gold / Bronze)

Customers

Secondary

Tertiary

Requirements to become distributor:

• Capacity to hold 5 days stock

• FDA license

• Shop establishment certificate

• Electricity bill

• Address proof

• Bank statement

Indirect

Distributors cover:

500-600 outlets

FOBO

Pepsi India

Full Coverage - 59 Routes

Retailer Handling

45– Pre- sellers

Owned & contracted vehicles

56 – Owned Vehicles

Transporting Vans

1 Driver + 2 Loaders

No return

Retailers’ Loss

Delhi-NCR

Distributors Functions PARAMETER

Bulk Breaking Depends upon location

Warehousing Storage & safety

Transportation Distributor to retailer

Market Information Sourcing

Customer IntelligenceCompetitor Intelligence

Consumer tastes & preferences

Maintaining a) Visual Merchandisingb) Banners, posters, etc.

a) Signage b) Interior ambience

c) Overall environment

• From company : discounts/incentives given at the end of the month

• From retailer : bad debts/run away

Problems faced by distributor

Logistics

PARAMETERS

1) Average order sizea) Distributor to companyb) Retailer to Distributer

Based on Demand, Season

2) Order placementa) Distributor to companyb) Retailer to distributer

PhoneDistributor Representative

3) Transit Time 2 Days

4) Order frequency Daily

PARAMETERS

5) Inventory Maintained 1 day

6) Unsold/Damaged Merchandise

Replaced

7) Technologya) A/C Keeping

b) Stock keepingc) Complaint Handling

8) Mode of Transportation(company to distributor)

Company vehicle

9) Transportation Expensesa) Company to Distributorb) Distributor to retailer

CompanyDistributor

10)Warehousinga) Storage Capacityb) Ownership

Minimum 30 m2

Owned / Rented

11) Stock keeping responsibility

Stock keeper

Logistics

On a tablet or Blackberr

y

Flow of The Product

Cannot take more than order

Contd.

Only cash except for a

few

Performance Management

RED Strategy – Right Execution Daily

Tool to measure the performance of the distributor in the outlet by setting some standard or parameter of execution.

RED Check Visi-Cooler Management Availability of the product in the outlet Check the activation in the outlet

Market Developer checks 25 outlets a day and report to HCCBL on the score of 100.

Margins

Margins per crate (comprising 24 bottles of 300 ml each) is Rs 20.

On the 200 ml pack size, margin is Rs 16 per crate.

Sales of the more affordable 200 ml pack size account for about 60 per cent of its total carbonated soft drink (CSD) sales.

Non-CSD business accounts for 15 per cent.

Outsourced distribution so that trucks and other equipment needed for the purpose are no longer owned by the company.

Financials

Coco-Cola

Profit Margin

a) To distributorsb) To retailers

1-1.5%2-3%

Advance payment

a) to companyb) for refrigerators

1,00,0005,000

Credit terms and policies

i) Credit amount a)Company to

distributor b)Distributor to retailer

N/ACan provide.

ii) Credit period One month(for retailers)

Learning’s The real time order processing system through use of technology helps

reduce the lead time

24hrs working i.e. the loading cases in the night saves valuable time

Recommendations Pre-sellers shouldn’t be looked at as an extra cost. On the contrary, since

their inception sales have risen

Order devices at Diamond outlets can facilitate quicker order placement

thank you